Given that steel PSUs are riddled with problems, Tata Steel and JSW Steel are the two private companies which are seen to grab these opportunities.

While five steel firms — Essar Steel, Bhushan Power and Steel, Bhushan Steel, Monnet Ispat and Electrosteel — have been referred to the insolvency court by the Reserve Bank of India, analysts believe that it could also enhance opportunities for consolidation in the sector. Given that steel PSUs are riddled with problems, Tata Steel and JSW Steel are the two private companies which are seen to grab these opportunities. Tata Steel’s managing director TV Narendran tells Surya Sarathi Ray about his company’s plans in this context. Excerpts: Don’t you think consolidation is imminent for the Indian steel industry? It all depends on how the current process of stressed assets’ resolution goes through. Let’s see how things turn out.

Will Tata Steel be interested?

Certainly, if there is good opportunity, but it is too early to say.

There are five of them (before the insolvency court). Doesn’t any of them fit into Tata Steel’s long-term business strategy?

We are in the steel business and from that point of view, any steel company would fit into our business. The question is what are the terms and conditions and what the process is. We are waiting to see how things turn out. There are only two — Tata Steel and JSW Steel — which can buy these assets because the government has already said SAIL and RINL would not take part. There may be others from outside. India is an interesting market for many global companies. You never know.

Are you saying that foreign companies may buy a stake in these companies?

I don’t have any specific information, but why not? India is a country where you a can have 100% stake (FDI) in steel companies.

How do you see the Indian steel industry panning out two years down the line?

The industry had come out of the fairly bad year 2015 and 2016 was better. Hopefully, 2017 will be better than 2016. However, consumption of steel has to go up. The government is giving a lot of focus on infrastructure. Infrastructure is very steel-intensive. From that point of view, I am certainly optimistic as far as steel consumption in India is concerned.

What else do you need from the government?

To be fair, the government had been very supportive. When we were in trouble in 2015, they stepped up very fast. We appreciate that. Till 2015, the steel industry did not go to the government for help. But 2015 was very difficult and that’s why we went to the government and it immediately responded. So, to be fair, in the medium to long-term, we should be able to stand on our own. We should go to the government only when there are specific reasons.

And, you think there is no reason now for the industry to go to the government?

We are continuously engaged with the government on how to reduce the cost of doing business. Ease of doing business is certainly improving. Any reduction in the cost of doing business will depend a lot on infrastructure that has been created. That’s why when the government invests in infrastructure, it does not only help consumption of steel to grow, but also helps in reducing the cost of moving steel, bringing in the raw materials. Logistic cost in India is one of the highest in the world. As we invest in railways, roadways, ports and riverways, the cost will come down. Those are the areas where we should improve and the government recognises that. The government is already working towards that.